EsadeGeo Daily Digest, 20/03/2020

Foreign Affairs – Branko Milanovic / The real pandemic danger is social collapse

  • As of March 2020, the entire world is affected by an evil with which it is incapable of dealing effectively and regarding whose duration no one can make any serious predictions. The economic repercussions of the novel coronavirus pandemic must not be understood as an ordinary problem that macroeconomics can solve or alleviate.
  • Rather, the world could be witnessing a fundamental shift in the very nature of the global economy. The immediate crisis is one of both supply and demand. Supply is falling because companies are closing down or reducing their workloads to protect workers from contracting COVID-19, the disease caused by the new coronavirus.
  • The supply shock is exacerbated by a decrease in demand due to the fact that people are locked in, and many of the goods and services they used to consume are no longer available. If you shut countries off and stop air traffic, no amount of demand and price management will make people fly.
  • The world faces the prospect of a profound shift: a return to natural—which is to say, self-sufficient—economy. That shift is the very opposite of globalization. If the crisis continues, globalization could unravel. The longer the crisis lasts, and the longer obstacles to the free flow of people, goods, and capital are in place, the more that state of affairs will come to seem normal.
  • Foreign Policy – Morten Soendergaard Larsen and Robbie Gramer / China casts itself as global savior while U.S. and EU focus on virus at home

The Economist / Paying to stop the pandemic

  • Planet Earth is shutting down. In the struggle to get a grip on covid-19, one country after another is demanding that its citizens shun society. As that sends economies reeling, desperate governments are trying to tide over companies and consumers by handing out trillions of dollars in aid and loan guarantees.
  • Nobody can be sure how well these rescues will work. But there is worse. Troubling new findings suggest that stopping the pandemic might require repeated shutdowns. And yet it is also now clear that such a strategy would condemn the world economy to grave—perhaps intolerable—harm. Some very hard choices lie ahead.
  • Spooked, governments are rushing to impose controls that would have been unimaginable only a few weeks ago. Scores of countries, including many in Africa and Latin America, have barred travellers from places where the virus is rife. Times Square is deserted, the City of London is dark and in France, Italy and Spain cafés, bars and restaurants have bolted their doors.
  • Data for January and February show that industrial output in China, which had been forecast to fall by 3% compared with a year earlier, was down by 13.5%. Retail sales were not 4% lower, but 20.5%. Fixed-asset investment, which measures the spending on such things as machinery and infrastructure, declined by 24%, six times more than predicted. That has sent economic forecasters the world over scurrying to revise down their predictions.
  • Financial Times – Christine Lagarde / The ECB will do everything necessary to counter the virus

The New York Times – Eric Lipton and Nicholas Fandos / Senator Richard Burr sold a fortune in stocks as G.O.P. played down coronavirus threat

  • Senator Richard M. Burr sold hundreds of thousands of dollars’ worth of stock in major companies last month, as President Trump and others in his party were still playing down the threat presented by the coronavirus outbreak and before the stock market’s precipitous plunge.
  • The stocks were sold in mid-February, days after Mr. Burr, Republican of North Carolina and the chairman of the Intelligence Committee, wrote an opinion article for Fox News suggesting that the United States was “better prepared than ever before” to confront the virus. At least three other senators sold major stock holdings around the same time, disclosure records show.
  • Two weeks after Mr. Burr sold his stocks, he spoke at the Capitol Hill Club in Washington to a nonpartisan group called the Tar Heel Club, warning that the virus could soon cause a major disruption in the United States. “There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything we have seen in recent history,” Mr. Burr said.
  • Mr. Burr accused NPR of twisting his comments into a “tabloid-style hit piece.” He argued that the report made him look duplicitous for sharing information at a publicly advertised event that was consistent with the message members of the Trump administration were then trying to promulgate. He did not address his stock sales.
  • The Washington Post – John Wagner / Sen. Burr offered dire warning about the coronavirus at private luncheon three weeks ago

Bloomberg – Natalia Drozdiak and Lucas Shaw / YouTube, Netflix cut stream quality in Europe to ease networks

  • Netflix Inc. and Google’s YouTube agreed to reduce the quality of their video streaming in Europe to relieve networks strained by the coronavirus pandemic. The moves follow separate discussions between European Industry Commissioner Thierry Breton and Netflix Chief Executive Officer Reed Hastings, and with Google Chief Executive Officer Sundar Pichai and YouTube’s CEO Susan Wojcicki.
  • YouTube said Friday it would temporarily switch all traffic in Europe to standard definition by default for 30 days. “We will continue working with member state governments and network operators to minimize stress on the system, while also delivering a good user experience,” YouTube said in a statement, adding it has so far only seen a few usage peaks.
  • Netflix will begin reducing bit rates across all its streams in Europe for a month, the Silicon Valley-based company said in a statement Thursday. “We estimate that this will reduce Netflix traffic on European networks by around 25% while also ensuring a good quality service for our members.”
  • The virus outbreak has shuttered schools, businesses and restaurants in much of the region, sending millions of people home — where they’re using services like Netflix and YouTube. The amount of time people spent streaming spiked by more than 20% worldwide last weekend, including more than 40% in Austria and Spain. While traffic has increased, EU telecom regulators say there haven’t been any signs of congestion in Europe and operators appear able to cope with the situation.
  • Politico – Tim King / In EU’s retreat, a way forward

Further reading for the weekend:

The selected pieces do not necessarily reflect the views of Javier Solana and EsadeGeo. The summaries above may include word-for-word excerpts from their respective pieces.

Política Internacional |